##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010.
 o
    
    TRANSITION REPORTING PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO .
 COMMISSION FILE NO. 001-34490
 SYNTROLEUM CORPORATION
  Delaware
    
    73-1565725(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 5416 S. Yale Suite 400
Tulsa, Oklahoma 74135
 (918) 592-7900
 
 
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No o
 Form 10-K. þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Smaller reporting company o
    
    Non-accelerated filer o
 Yes o No þ




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##### 



TABLE OF CONTENTS
 PagePart IItem 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    7Item 1B. Unresolved Staff Comments
    
    
    13Item 2. Properties
    
    
    13Item 3. Legal Proceedings
    
    
    13Item 4. Removed and Reserved
    
    
    13Part IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    13Item 6. Selected Financial Data
    
    
    16Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    16Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 8. Financial Statements and Supplementary Data
    
    
    24Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    24Item 9A. Controls and Procedures
    
    
    24Item 9B. Other Information
    
    
    25Part IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    26Item 11. Executive Compensation
    
    
    28Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    37Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    38Item 14. Principal Accountant Fees and Services
    
    
    38Part IVItem 15. Exhibits and Financial Statement Schedules
    
    
    39Exhibit 99.3Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  FORWARD-LOOKING STATEMENTS
 ® ® ® ®




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##### Table of Contents



PART I
 
 Item 1.
    
    Business
 Overview
   ®
  ® ® rd ® ® ® ® ® ®
 Bio-Synfining Projects  Dynamic Fuels
      2




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##### Table of Contents



Business Strategy
  Focus on commercialization through project development.
 Transfer the Syntroleum® Process.
 Provide Support and Process Design Packages through Engineering Services
 The Syntroleum® Process
 ® ®
 Ultra-clean liquid fuels
 Specialty products
 ®
  ®
 Step 1
Conversion of Carbon Feedstock to Synthesis Gas
 
  3




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Step 2
Fischer  Tropsch Synthesis
 
   The Synfining® Process
 ®
 The Bio-Synfining® Process
 ®
 Syntroleum Advantage
 ®
     Bio-Synfined fuel compared to Biodiesel
  Resource Base
 Bio-Feedstocks
   4




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##### Table of Contents



FT Feedstocks
    Market Demand
 Government Legislation.
    5




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##### Table of Contents



Intellectual Property
 ® ®
   Employees
  Government Regulation
    6




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##### Table of Contents



Operating Hazards
  Available Information
  
 Item 1A.
    
    Risk Factors
  Risks Relating to Our Technology
 We might not successfully commercialize our technology, and commercial-scale plants based on
the Syntroleum® Process may never be successfully constructed or operated by ourselves or our
licensees.
 ® ® ®
 ® ®
  7




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Commercial-scale plants based on the Syntroleum® Technologies might not produce results
necessary for success, including results demonstrated on a laboratory, pilot plant and
demonstration basis.
 ® ® ®
 
    
    Synthesis gas catalyst activity less than design basis which would require an
increase the amount of catalyst, and/or number of reactors required to produce the
design synthesis gas rate and increase capital and operating costs;
 
    
    lower Fischer-Tropsch catalyst activity which would increase the amount of
catalyst or number of reactors required to convert synthesis gas into liquid
hydrocarbons and increase capital and operating costs;
 
    
    lower reaction activity than that demonstrated in laboratory, pilot plant and
demonstration plant operations, which would increase the amount of catalyst or number
of reactors required to convert FT products into finished, marketable fuels;
 
    
    shorter than anticipated catalyst life, which would require more frequent catalyst
regeneration, catalyst purchases, or both, thereby increasing operating costs;
 
    
    excessive production of gaseous light hydrocarbons from the FT reaction compared
to design basis, which would lower the amount of liquid hydrocarbons produced, reduce
revenues, and reduce margins;
 
    
    inability of third-party gasification and synthesis gas clean-up technology
integrated into the Syntroleum® Process to produce on specification synthesis gas
adequate for economic operation of a GTL, CTL or BTL plant; and
 
    
    higher than anticipated capital and operating costs.
  
    
    higher than anticipated catalyst or hydrogen consumption;
 
    
    inadequate removal of feedstock impurities in pre-treatment;
 
    
    lower process yields than that demonstrated in laboratory operations; and
 
    
    higher than anticipated capital and operating costs.
 ®
 Many of our competitors have significantly more resources than we do, and technologies
developed by competitors could become more commercially successful than ours or render our
technologies obsolete.
 ®
  Our ability to protect our intellectual property rights involves complexities and
uncertainties and commercialization of our Syntroleum® Technologies could give rise to claims that
our technology infringes upon the rights of others.
   8




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##### Table of Contents



® ® ®
 We could have potential indemnification liabilities to licensees relating to the operation of
plants based on our Syntroleum® Technologies or intellectual property disputes.
 ® ®
 
    
    use of patent rights and technical information relating to the Syntroleum®
Technologies;
 
    
    acts or omissions by us in connection with our preparation of process design
packages (PDP) for plants; and
 
    
    performance guarantees that we may provide.
 Risks Relating to Products of the Syntroleum® Technologies
 The U.S. renewable fuels industry is highly dependent on a mix of federal and state
legislation and regulation and any changes in legislation or regulation could harm our business and
financial condition.
    9




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Risks Relating to Our Business
 We will need to obtain funds from additional financings or other sources for our business
activities. If we do not receive these funds, we would need to reduce, delay or eliminate some of
our expenditures.
     Construction and operations of plants based on the Syntroleum® Technologies will be subject to
risks of delay and cost overruns.
 ®
 We need to remain listed on the NASDAQ stock market to be able to access adequate funding from
time to time. We could face de-listing issues that would impair the liquidity of our stock and our
availability to access the capital markets.
  We have incurred losses.
    10




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If prices or margins for crude oil, natural gas, coal, vegetable oils and fats and other
commodities are unfavorable, plants based on the Syntroleum® Technologies may not be economical.
 ®
 
    
    changes in supply and demand balance of feedstocks and refined products;
 
    
    weather conditions;
 
    
    domestic and foreign government regulation;
 
    
    actions of the Organization of Petroleum Exporting Countries;
 
    
    political conditions in countries producing feedstocks;
 
    
    supply of crude oil, natural gas, coal, biomass fats, greases and vegetable oils;
 
    
    location of GTL plants relative to natural gas reserves and pipelines;
 
    
    location of CTL plants relative to coal reserves and transportation systems;
 
    
    location of BTL plants relative to biomass reserves and transportation systems;
 
    
    capacities of pipelines;
 
    
    fluctuations in seasonal demand;
 
    
    crop yields;
 
    
    seasonality of prices for feedstocks and refined products;
 
    
    farmer planting decisions;
 
    
    output and proximity of crush facilities that convert the crops to oils;
 
    
    alternative uses for fats;
 
    
    number of animals slaughtered and rendered;
 
    
    price and availability of alternative fuels; and
 
    
    overall economic conditions.
 Our success depends on the performance of our executive officers and key personnel, the loss
of who would disrupt our business operations.
  We depend on strategic relationships with feedstock suppliers, construction contractors, site
owners, manufacturing and engineering companies, and customers. If we are not successful in
entering into and achieving the benefits of these relationships, this could negatively impact our
business.
   11




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Our operating results may be volatile due to a variety of factors and are not a meaningful
indicator of future performance.
  
    
    timing of any construction by us or our licensees of plants;
 
    
    demand for licenses or other technology transfer agreements of the Syntroleum®
Technologies and receipt and revenue recognition of license fees;
 
    
    volatile price of commodities used and produced;
 
    
    introduction or enhancement of FT and renewable fuels technologies by us and our
competitors;
 
    
    market acceptance of new technologies; and
 
    
    general economic conditions.
  We are subject to extensive laws relating to the protection of the environment, and these laws
may increase the cost of designing, constructing and operating our plants based on the Syntroleum®
Technologies or affect demand for the products of these plants.
   Terrorist threats and U.S. military actions could result in a material adverse effect on our
business.
   We may not have enough insurance to cover all of the risks we face.
   12




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##### Table of Contents



Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
   
 Item 3.
    
    Legal Proceedings
  
 Item 4.
    
    Removed and Reserved.
 
 Part II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 Stock Prices
 Sales PriceHigh
    
    
    LowYear Ended December 31, 2010:First Quarter
    
    $
    2.95
    
    
    $
    2.12Second Quarter
    
    $
    2.30
    
    
    $
    1.64Third Quarter
    
    $
    2.14
    
    
    $
    1.50Fourth Quarter
    
    $
    2.02
    
    
    $
    1.70Year Ended December 31, 2009:First Quarter
    
    $
    1.46
    
    
    $
    0.61Second Quarter
    
    $
    2.58
    
    
    $
    1.34Third Quarter
    
    $
    3.13
    
    
    $
    1.97Fourth Quarter
    
    $
    2.76
    
    
    $
    2.02
 Record Holders.
 Dividends.
 Our stock price may continue to be volatile and could decline in the future.
  13




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##### Table of Contents



Future sales of our common stock could adversely affect our stock price.
 Issuer Repurchases of Equity Securities
  Equity Compensation Plans
  Equity Compensation Plan Information
 Number of SecuritiesRemaining Available forNumber of Securities to
    
    
    Weighted-average Exercise
    
    
    Future Issuance Underbe Issued Upon Exercise
    
    
    Price of Outstanding
    
    
    Equity Compensation Plansof Outstanding Options,
    
    
    Options, Warrants and
    
    
    (excluding securitiesWarrants and Rights
    
    
    Rights
    
    
    reflected in column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity Compensation
Plans Approved by
Security Holders
(1)(2)
    
    
    7,378,798
    
    
    $
    2.05
    
    
    
    4,637,846Equity Compensation
Plans Not Approved
by Security Holders
(3)(4)(5)(6)
    
    
    10,926,871
    
    
    $
    2.97
    
    
    
    4,240,256Total
    
    
    18,305,669
    
    
    $
    2.60
    
    
    
    8,878,102
 (1)
    
    Includes the 1993 Stock Option and Incentive Plan, the 1997 Stock
Incentive Plan, the 2005 Stock Incentive Plan, as amended, including the Stock Option
Plan for Outside Directors.(2)
    
    Includes up to 75,000 shares to be issued upon exercise of warrants issued to
Sovereign Oil & Gas Company II, LLC, a consulting firm that we previously have retained
to assist us in acquiring stranded natural gas fields worldwide, which were approved by
our stockholders. The warrants are issuable in varying amounts upon the acquisition of
properties of the achievement of third-party participation in a project, and have an
exercise price of between $6.40 and $7.98 per share for warrants issued since October
2004.(3)
    
    On August 31, 2002, we granted options to purchase 1,000,000 shares of our
common stock at an exercise price of $1.55 to our previous Chief Executive Officer,
John B. Holmes, Jr., as an inducement to his employment with Syntroleum. The ability
to exercise the options will terminate upon the tenth anniversary of the date of the
grant.(4)
    
    Includes up to 4,250,000 shares to be issued upon exercise of warrants issued
to Tyson. The warrants are issuable upon Tyson remaining at least a 10% equity owner
in Dynamic and upon commercial operation of the plant. The warrants have an exercise
price of $2.87 per share. An additional 4,000,000 shares remain available to issue to
Tyson upon Tyson remaining an equity partner and commercial operations of plants in
the future.(5)
    
    We have registered via S-8 750,000 shares of common stock issuable as matching
pursuant to the terms of the Syntroleum 401 (k) Plan. As of December 31, 2010, we have
issued 509,744 shares under this Plan.(6)
    
    Includes up to 5,676,871 shares to be issued upon exercise of warrants issued
to Fletcher International Ltd. (Fletcher). The warrants were issued in 2009 and 2010.
The warrants have an exercise price of $3.30 per share and expire six years from the
dates the warrants were issued.  14




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##### Table of Contents



Use of Proceeds
  Performance Graph
  VALUE OF $100 INVESTMENT
 
  15




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##### Table of Contents



Item 6.
    
    Selected Financial Data
  For the Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(in thousands, except per share data)Statement of Operations Data:Total revenues
    
    $
    8,410
    
    
    $
    27,432
    
    
    $
    4,890
    
    
    $
    16,472
    
    
    $
    2,700Operating income (loss)
    
    
    (2,252
    )
    
    
    12,469
    
    
    
    (8,381
    )
    
    
    (10,362
    )
    
    
    (28,506
    )Income (loss) from continuing operations
    
    
    (9,633
    )
    
    
    5,160
    
    
    
    (5,448
    )
    
    
    (10,550
    )
    
    
    (28,070
    )Income (loss) from discontinued operations
    
    
    97
    
    
    
    (122
    )
    
    
    1,310
    
    
    
    13,595
    
    
    
    (26,555
    )Net income (loss)
    
    $
    (9,536
    )
    
    $
    5,038
    
    
    $
    (4,138
    )
    
    $
    3,751
    
    
    $
    (54,625
    )Basic and diluted per share amounts -Income (loss) from continuing operations
    
    $
    (0.12
    )
    
    $
    0.07
    
    
    $
    (0.09
    )
    
    $
    (0.17
    )
    
    $
    (0.50
    )Income (loss) from discontinued operations
    
    $
    (0.00
    )
    
    $
    0.00
    
    
    $
    0.02
    
    
    $
    0.23
    
    
    $
    (0.48
    )Net income (loss)
    
    $
    (0.12
    )
    
    $
    0.07
    
    
    $
    (0.07
    )
    
    $
    0.06
    
    
    $
    (0.98
    )
 As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(in thousands)Balance Sheet Data:Working capital
    
    $
    12,950
    
    
    $
    27,307
    
    
    $
    7,709
    
    
    $
    22,401
    
    
    $
    29,199Total assets
    
    
    59,396
    
    
    
    58,861
    
    
    
    38,838
    
    
    
    32,291
    
    
    
    43,937Convertible debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,641Deferred revenue
    
    
    24,300
    
    
    
    25,668
    
    
    
    22,613
    
    
    
    22,578
    
    
    
    21,840
 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
 Overview
 ® ® ® ®
 ®
 Operating Revenues
  ® ®
  16




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®
 Operating Expenses
   ®
  Commercial and Licensee Projects
      17




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Discontinued Operations
 Research and Development
 ®
 Results of Operations
 Consolidated Results for the Years Ended December 31
 Revenues
    
    2010
    
    
    2009
    
    
    2008(in thousands)Technology Revenue
    
    $
    3,600
    
    
    $
    22,503
    
    
    $
    Technical Services Revenue
    
    
    2,805
    
    
    
    1,940
    
    
    
    576Technical Services Revenue from Dynamic Fuels
    
    
    2,005
    
    
    
    2,767
    
    
    
    2,592Other Revenue
    
    
    
    
    
    
    222
    
    
    
    1,722Total Revenues
    
    $
    8,410
    
    
    $
    27,432
    
    
    $
    4,890
 Technology Revenue.
 Technical Services Revenue
 Other Revenue.
 Operating Costs and Expenses
    
    2010
    
    
    2009
    
    
    2008(in thousands)Engineering
    
    $
    2,871
    
    
    $
    3,416
    
    
    $
    3,803Depreciation and amortization
    
    
    217
    
    
    
    339
    
    
    
    620Non-cash equity compensation
    
    
    1,719
    
    
    
    4,180
    
    
    
    2,418General and administrative and other
    
    
    5,855
    
    
    
    7,028
    
    
    
    6,430Total Operating Costs and Expenses
    
    $
    10,662
    
    
    $
    14,963
    
    
    $
    13,271
  18




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##### Table of Contents



Engineering Expense.
 Non-Cash Equity Compensation
 General and Administrative and Other.
 Other Income and Expenses
    
    2010
    
    
    2009
    
    
    2008(in thousands)Interest Income
    
    $
    31
    
    
    $
    96
    
    
    $
    542Other Income
    
    
    64
    
    
    
    70
    
    
    
    25Loss in equity of Dynamic Fuels, LLC
    
    
    (5,628
    )
    
    
    (4,158
    )
    
    
    (424
    )Foreign Currency Exchange
    
    
    (1,848
    )
    
    
    (3,036
    )
    
    
    2,790Income taxes
    
    
    
    
    
    
    (281
    )
    
    
    Income (Loss) From Discontinued Operations
    
    
    97
    
    
    
    (122
    )
    
    
    1,310
 Interest Income.
 Loss in equity of Dynamic Fuels, LLC.
 Foreign Currency Exchange.
 Income (Loss) from Discontinued Operations.
  Liquidity and Capital Resources
 General
   19




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##### Table of Contents



Cash Flows
 2010 vs. 2009
    2009 vs. 2008
    Contractual Obligations
  Payments Due by Period(In thousands)Less than 1
    
    
    
    
    
    
    
    
    
    
    After 5Contractual Obligations
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsOperating Lease Obligations
    
    $
    478
    
    
    $
    181
    
    
    $
    232
    
    
    $
    18
    
    
    $
    47Asset Retirement Obligations
    
    
    603
    
    
    
    
    
    
    
    603
    
    
    
    
    
    
    
    Total
    
    $
    1,081
    
    
    $
    181
    
    
    $
    835
    
    
    $
    18
    
    
    $
    47
    20




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##### Table of Contents



Equity Issuances
       21




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New Accounting Pronouncements
    Critical Accounting Policies and Estimates
  Revenue Recognition.
    22




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##### Table of Contents



Stock-Based Compensation.
 Non-Employee Stock-Based Compensation. .
 Asset Retirement Obligations.
 Critical Estimates.
 
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk.
 ® . ®
   23




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Item 8.
    
    Financial Statements and Supplementary Data
  
 Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Controls.
 Managements Report on Internal Control Over Financial Reporting.
    24




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated
Framework
    Internal
ControlIntegrated Framework
   
 
 Item 9B.
    
    Other Information
   25




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PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
  2011  Class C Directors
 Name and Business Experience
    
    AgeAlvin R. Albe, Jr.
    
    
    57Mr. Albe has served as a director since December 1988. Mr. Albe is currently a Senior
Advisor to TCW Group, Inc. (TCW), an investment management firm. Prior to joining TCW in
1991, Mr. Albe was President of Oakmont Corporation, a family office that administers and
manages assets for high net worth individuals and their families. Mr. Albe was associated
with Oakmont Corporation from 1982 to 1991. Prior to 1982, Mr. Albe was Manager of
Accounting at McMoRan Oil and Gas Co., and a Certified Public Accountant with Arthur
Andersen & Co. in New Orleans. Mr. Albe graduated from the University of New Orleans with a
B.S. in Accounting. The board selected Mr. Albe to serve as a director because of his
extensive financial background in investments and accounting standards.Edward G. Roth
    
    
    54Mr. Roth has been our President and Chief Executive Officer since November 19, 2007 and a
director since March 16, 2007. Mr. Roth joined Syntroleum in July 2004 as our Senior Vice
President of Projects. In April 2005, Mr. Roth was named our Executive Vice President of
Engineering and Chief Technology Officer and in March 2007 was appointed as our President.
Prior to joining Syntroleum in July 2004, Mr. Roth was employed by Petrofac Resources
International, serving in varying positions from December 1997 to July 2004. In July 2003,
Mr. Roth served as President and Chief Operating Officer of Petrofac LLC, a company involved
in all facets of turnkey engineering, procurement and construction in refining and gas
processing. From February 1994 to December 1997, Mr. Roth was Vice President of Engineering
& Operations at Zilkha Energy. From December 1979 to February 1994, he was employed by ARCO
in various capacities, including drilling production operations and business development
both domestically and internationally. Mr. Roth has a B.S. in Petroleum Engineering from
Texas A&M University and a M.B.A. in Finance from the University of Chicago. Mr. Roth is a
certified professional engineer. Mr. Roth was selected by the board for his extensive
background in the energy industry in engineering, procurement and construction in refining
and gas processing as well as for his engineering technical expertise and executive
experience.
 2012  Class A Directors
 Name and Business Experience
    
    AgeFrank M. Bumstead
    
    
    69Mr. Bumstead has been a director since May 1993. He has served as the Chairman of Flood,
Bumstead, McCready & McCarthy, Inc., a financial and business management firm, since 1989
and as a managing member of FBM Consults, LLC since January 1, 2001. Mr. Bumstead presently
serves as a director and Chairman of the Compensation Committee of Brookdale Senior Living,
Inc.; a New York Stock Exchange listed company, director of United Supermarkets, Inc.;
director of Nashville Wire Products, Inc.; a trustee of The Memorial Foundation and chairman
of audit, finance and investment committees for the Country Music Association, Inc. Mr.
Bumstead holds a B.S. in Business Administration from Southern Methodist University and a
Masters of Business Management from Vanderbilt Owen Graduate School of Management. The
board selected Mr. Bumstead to serve as a director because of his experience in financial
management and his board experience with other public companies.Robert B. Rosene, Jr.
    
    
    57Mr. Rosene has been our Chairman of the board since November 19, 2007 and a director since
March 1985. Mr. Rosene has been President of Seminole Energy Services, L.L.C., a natural
gas marketing and gathering company, since 1998. From 1984 to August 1998, he was Vice
President of Boyd Rosene and Associates, Inc., a natural gas consulting and marketing firm
which he co-founded. From 1976 to 1984, he was employed with Transok Pipeline Company, where
he served in various positions, including Manager of Rates and Contract Administration and
director of Gas Acquisitions. In 1987, Mr. Rosene co-founded MBR Resources, an oil and gas
production company with operations in Arkansas, New Mexico, Oklahoma and Texas. Mr. Rosene
holds a B.A. in Accounting from Oklahoma Baptist University. The board selected Mr. Rosene
for his expansive knowledge of the oil and gas industry and macro-economic global conditions
and his ability to bring a unique and valuable perspective to the board.
  26




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##### Table of Contents



2013 Class B Directors
 Name and Business Experience
    
    AgeP. Anthony Jacobs
    
    
    69Mr. Jacobs has served as a director since November 1995. Mr. Jacobs also served as the
Chairman of the board of SLH Corporation, a predecessor to the company, from December 1996
through the closing date of the merger of Syntroleum Corporation into SLH Corporation in
August 1998. Mr. Jacobs retired in 1998. Previously he served as President and Chief
Executive Officer of Lab Holdings, Inc., a company principally engaged in the laboratory
testing business, from September 1997 until August of 1999 when Lab Holdings merged with Lab
One, Inc. From 1990 to 1993, he served as Executive Vice President and Chief Operating
Officer of Seafield Capital Corporation, and from May 1993 to September 1997, he served as
President and Chief Operating Officer of Seafield Capital Corporation. Mr. Jacobs holds a
B.A. and an M.B.A. from the University of Kansas and is also a Chartered Financial Analyst.
The board selected Mr. Jacobs to serve as a director because he brings extensive financial
expertise in both the public and private markets.James R. Seward
    
    
    58Mr. Seward has served as a director since December 1988. Mr. Seward also served as the
President, Chief Executive Officer and director of SLH Corporation from February 1997
through the closing date of the merger of Syntroleum Corporation into SLH Corporation in
August 1998. Mr. Seward is currently a private investor. Mr. Seward presently serves as a
director of Brookdale Senior Living, Inc, a company traded on the New York Stock Exchange
and RBC Funds, a family of publicly traded mutual funds. From 1990 to September 1997, Mr.
Seward served as Chief Financial Officer and a director of Seafield Capital Corporation.
From 1990 to May 1993, he served as Senior Vice President of Seafield Capital Corporation,
and from May 1993 to September 1997, he served as Executive Vice President. Mr. Seward
holds a B.A. from Baker University and an M.B.A. in Finance and a M.P.A. from the University
of Kansas and is also a Chartered Financial Analyst. The board selected Mr. Seward to serve
as a director because it believes he possesses valuable financial expertise, including
extensive experience with capital markets transactions and investments in both public and
private companies.
  Director Meetings and Compensation
      Stock Ownership Guidelines for Directors
   27




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##### Table of Contents



Corporate Governance
 www.syntroleum.com
 Executive Officers of the Company
  Name
    
    Age
    
    PositionEdward G. Roth
    
    54
    
    Chief Executive Officer, President and DirectorKaren L. Gallagher
    
    59
    
    Senior Vice President of Finance and Principal Financial Officer
  Karen L. Gallagher
 Section 16(a) Beneficial Ownership Reporting Compliance
  Audit Committee Expert
   
 Item 11.
    
    Executive Compensation
 COMPENSATION DISCUSSION AND ANALYSIS
 Executive Compensation Philosophy and Objectives
  Role of the Nominating and Compensation Committee and Management
   28




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##### Table of Contents



th th
   Elements of Compensation Plan
   Base Pay
 
  29




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##### Table of Contents



Incentive Compensation
 
      30




---



##### Table of Contents



Performance Based Long-Term Equity Incentive Compensation
  
  
    
    Approximately 12% total vesting, upon the date of closing of the financing for
the construction of a commercial Bio-Synfining Plant (the Plant); and
 
    
    Approximately 12% total vesting, upon the date of the groundbreaking of the
above Plants construction; and
 
    
    Approximately 15% total vesting, upon the date of completion start-up
operations and commencement of the Plants commercial operations; and
 
    
    Approximately 61% total vesting, upon the successful completion of the
performance testing on the Plant.
  Benefits
  Severance and Retirement
  Stock Ownership Guidelines
   31




---



##### Table of Contents



Compliance with Internal Revenue Code Section 162(m)
  EXECUTIVE COMPENSATION
  Summary Compensation Table
 Change inPension ValueNon-
    
    
    &Equity
    
    
    NonqualifiedIncentive
    
    
    DeferredStock
    
    
    Option
    
    
    Plan
    
    
    Compensation
    
    
    All OtherName and Principal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Earnings
    
    
    Compensation
    
    
    TotalPosition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(a)
    
(b)
    
    
(c)
    
    
(d)
    
    
(e)(1)
    
    
(f)(1)
    
    
(g)(2)
    
    
(h)
    
    
(i)(3)
    
    
(j)Edward G. Roth; President and Chief Executive Officer
    
    
    2010
    
    
    
    260,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    
    
    
    
    11,000
    
    
    
    471,0002009
    
    
    
    260,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,324,456
    
    
    
    
    
    
    
    11,000
    
    
    
    1,595,4562008
    
    
    
    260,000
    
    
    
    160,000
    
    
    
    330,000
    
    
    
    
    
    
    
    130,000
    
    
    
    
    
    
    
    10,250
    
    
    
    890,250Karen L. Gallagher; Senior Vice President Finance and Principal Financial Officer
    
    
    2010
    
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,000
    
    
    
    
    
    
    
    11,000
    
    
    
    221,0002009
    
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287,875
    
    
    
    
    
    
    
    11,000
    
    
    
    473,8752008
    
    
    
    175,000
    
    
    
    87,500
    
    
    
    
    
    
    
    126,350
    
    
    
    54,688
    
    
    
    
    
    
    
    10,250
    
    
    
    453,788
 (1)
    
    The amounts in columns (e) and (f) reflect the grant date fair value of awards during
the covered year. Grant date fair value is determined in accordance with the applicable
Accounting Standard Codification 718, Stock Compensation. These amounts do not reflect
whether the named executive officers have actually realized a financial benefit from the
awards. For information on the assumptions used to calculate the value of the awards,
refer to Note 8 to our consolidated financial statements in this Annual Report on Form
10-K for the fiscal year ended December 31, 2010. The awards listed above are all
performance based awards. The grant date fair value listed is based on the probable
outcome of the performance conditions. The Company has disclosed the maximum performance
value based on the probability of achieving these goals.(2)
    
    The amounts in column (g) reflect the cash awards to the named executive officers
under the Syntroleum compensation plan, which is discussed in further detail under
Compensation Discussion and Analysis-Incentive Compensation.(3)
    
    Amounts shown in column (i) represent a Company match of 401(k) contributions paid in
the form of Company stock.
   
   32




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##### Table of Contents



   
   2010 Grants of Plan-Based Awards
  All
    
    
    All OtherOther
    
    
    OptionStock
    
    
    Awards:Awards:
    
    
    NumberNumber
    
    
    of
    
    
    ExerciseEstimated Future Payouts
    
    
    Estimated Future Payouts
    
    
    of
    
    
    Securities
    
    
    or Base
    
    
    Grant DateUnder Non-Equity Incentive
    
    
    Under Equity Incentive
    
    
    Shares
    
    
    Under-
    
    
    Price of
    
    
    Fair ValuePlan Awards
    
    
    Plan Awards
    
    
    of Stock
    
    
    lying
    
    
    Option
    
    
    of Stock andGrant
    
    
    Threshold
    
    
    Target
    
    
    Maximum
    
    
    Threshold
    
    
    Target
    
    
    Maximum
    
    
    or Units
    
    
    Options
    
    
    Awards
    
    
    OptionName
    
    Date
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    ($/Sh)
    
    
    Awards(a)
    
    (b)
    
    
    (c)
    
    
    (d)(2)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)
    
    
    (k)
    
    
    (l)(1)Edward G. Roth; President and Chief Operating Officer
    
    
    12/24/10
    
    
    
    
    
    
    
    200,000Karen L. Gallagher; Senior Vice President of Finance and Principal Financial Officer
    
    
    12/24/10
    
    
    
    
    
    
    
    35,000
 (1)
    
    The amounts in column (l) reflect the fair value on the date of grant for options and
stock issued during 2010 that fall within the scope of guidance issued on Stock Based
Compensation by the financial accounting standards board. Assumptions used in the
calculation of these amounts are included in note 8 to the our audited financial statements
for the fiscal year ended December 31, 2010, included in this Annual Report on Form 10-K.(2)
    
    The amounts in column (d) reflect the cash awards to the named executive officers,
which is discussed in further detail under Compensation Discussion and Analysis-Incentive
Compensation.
  33




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##### Table of Contents



2010 Outstanding Equity Awards at Fiscal Year-End
  Option Awards
    
    
    Stock AwardsEquityEquity
    
    
    IncentiveIncentive
    
    
    PlanPlan
    
    
    Awards:Awards:
    
    
    Market orNumber
    
    
    PayoutEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    of
    
    
    Value ofIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unearned
    
    
    UnearnedNumber
    
    
    
    
    
    
    Plan Awards:
    
    
    
    
    
    
    
    
    
    
    Number
    
    
    Market
    
    
    Shares,
    
    
    Shares,of
    
    
    Number of
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    of Shares
    
    
    Value of
    
    
    Units or
    
    
    Units orSecurities
    
    
    Securities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    or Units
    
    
    Shares or
    
    
    Other
    
    
    OtherUnderlying
    
    
    Underlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    of Stock
    
    
    Units of
    
    
    Rights
    
    
    RightsUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    That
    
    
    Stock That
    
    
    That Have
    
    
    That HaveOptions
    
    
    Options
    
    
    Unearned
    
    
    Exercise
    
    
    Option
    
    
    Have Not
    
    
    Have Not
    
    
    Not
    
    
    Not(#)
    
    
    (#)
    
    
    Options
    
    
    Price
    
    
    Expiration
    
    
    Vested
    
    
    Vested
    
    
    Vested
    
    
    VestedName
    
    Exercisable
    
    
    Unexercisable
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    (#)
    
    
    ($)
    
    
    (#)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)(3)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)(1)
    
    
    (j)(2)Edward G. Roth; President and
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    900,000
    
    
    
    1,665,000Chief Operating Officer
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    2.89
    
    
    
    12/8/16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Karen L. Gallagher; Senior Vice President of Finance and Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    365,000
    
    
    
    0.66
    
    
    
    11/21/18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    The amounts in column (i) reflect performance based restricted stock awards granted
during 2008 for Mr. Roth. For detailed information on these grants refer to Compensation
Discussion and Analysis-Performance Based Long-Term Equity Incentive Compensation.(2)
    
    The amounts in column (j) reflect the fair value on December 31, 2010 based on a
closing market price of $1.85 per share.(3)
    
    The amounts in column (d) reflect performance based options granted during 2008 for
Ms. Gallagher. For detailed information on these grants refer to Compensation Discussion
and Analysis-Performance Based Long-Term Equity Incentive Compensation.
  34




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##### Table of Contents



2010 Option Exercises and Stock Vested
  Option Awards
    
    
    Stock AwardsNumber of
    
    
    
    
    
    
    Number ofShares
    
    
    
    
    
    
    SharesAcquired
    
    
    Value Realized
    
    
    Acquired
    
    
    Value Realizedon Exercise
    
    
    on Exercise
    
    
    on Vesting
    
    
    on VestingName
    
    (#)
    
    
    ($)
    
    
    (#)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)(1)Edward G. Roth; President and Chief Operating Officer
    
    
    
    
    
    
    
    
    
    
    175,000
    
    
    
    313,250Karen L. Gallagher;
Senior Vice President of Finance and Principal Financial Officer
    
    
    
    
    
    
    
 
 (1)
    
    The value realized in column (e) is equal to the number of vesting shares multiplied
by the closing stock price on the vest date.
 Post Employment Benefits/Change of Control Arrangement
  
    35




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##### Table of Contents



2010 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE
   Before Change in
    
    
    After Change inControl
    
    
    ControlTermination
    
    
    Terminationw/o Cause or for
    
    
    w/o Cause or
    
    
    Voluntary
    
    
    
    
    
    
    
    
    
    
    Change inName
    
    Benefit
    
    
    Good Reason
    
    
    for Good Reason
    
    
    Termination
    
    
    Death
    
    
    Disability
    
    
    ControlEdward G. Roth; President and Chief Operating Officer
    
    Severance pay
    
    
    780,000
    
    
    
    780,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    780,000Equity(1)
    
    
    1,665,000
    
    
    
    1,665,000
    
    
    
    
    
    
    
    1,665,000
    
    
    
    1,665,000
    
    
    
    1,665,000Total
    
    
    2,445,000
    
    
    
    2,445,000
    
    
    
    
    
    
    
    1,665,000
    
    
    
    1,665,000
    
    
    
    2,445,000Karen L. Gallagher; Senior Vice President of
Finance and Principal Financial Officer
    
    Severance pay
    
    
    43,749
    
    
    
    43,749
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,749Equity(1)
    
    
    434,350
    
    
    
    434,350
    
    
    
    
    
    
    
    434,350
    
    
    
    434,350
    
    
    
    434,350Total
    
    
    478,099
    
    
    
    478,099
    
    
    
    
    
    
    
    478,099
    
    
    
    478,099
    
    
    
    478,099
 (1)
    
    Equity values assume December 31, 2010 stock price of $1.85 and immediate exercise or sale
at termination.
 Compensation Committee Report
  Nominating and Compensation Committee
  36




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##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  PercentageName (1)(2)
    
    Shares
    
    
    of ClassCurrent Executive OfficersEdward G. Roth
    
    
    1,843,256
    
    
    
    2.2
    %Karen L. Gallagher
    
    
    247,416
    
    
    
    *DirectorsAlvin R. Albe, Jr.
    
    
    457,318
    
    
    
    *Frank M. Bumstead(3)
    
    
    326,564
    
    
    
    *P. Anthony Jacobs(4)
    
    
    782,838
    
    
    
    *Robert B. Rosene, Jr.(5)
    
    
    555,046
    
    
    
    *James R. Seward
    
    
    525,571
    
    
    
    *All directors and executive officers as a
group (7 persons)
    
    
    4,738,009
    
    
    
    5.8
    %BlackRock, Inc. 
40 East 52nd Street 
New York, NY 10022
    
    
    4,168,844
    
    
    
    5.1
    %Tyson Foods, Inc.

2200 Don Tyson Parkway 
Springdale, Arkansas 72762-6999
    
    
    8,000,000
    
    
    
    9.8
    %
 *
    
    Represents ownership of less than 1%.(1)
    
    Except as otherwise noted and subject to applicable community property laws, each
stockholder has sole voting and investment power with respect to the shares beneficially
owned. The business address of each director and executive officer is c/o Syntroleum
Corporation, 5416 S Yale Ave., Ste 400, Tulsa, OK, 74135.(2)
    
    Shares of common stock subject to options and warrants that are exercisable within 60
days of the date of this proxy statement are deemed outstanding for purposes of determining
beneficial ownership and computing the percentage ownership of such person, but are not
deemed outstanding for purposes of computing the percentage ownership of any other person.
Accordingly, the following shares of common stock subject to stock options or warrants are
included in the table: Edward G. Roth  150,000; Karen L. Gallagher  65,000; Alvin R.
Albe, Jr.  19,347; Frank M. Bumstead  19,347; P. Anthony Jacobs  8,943; Robert B.
Rosene, Jr.  19,347; James R. Seward  2,242; and all directors and executive officers
as a group  284,226. Restricted Stock awards granted but not vested as of March 11, 2011
are deemed outstanding for purposes of determining beneficial ownership and computing the
percentage ownership of such persons. Accordingly, the following restricted shares of
common stock subject to vesting based on milestone achievements by the Company are included
in the table: Edward G. Roth  900,000.
Under the Company 401K Plan, the Company matches employee contributions with shares of
common stock. Shares of common stock held by individuals in their 401K Plan are: Edward G.
Roth  31,372 and Karen L. Gallagher  6,416.
 (3)
    
    Includes 13,847 shares of common stock held by Mr. Bumsteads wife, as to which he
disclaims beneficial ownership.
 (4)
    
    Includes 125,000 shares of common stock held by Mr. Jacobs wife, as to which he
disclaims beneficial ownership, and 648,895 shares held by the P. Anthony Jacobs Trust.
 (5)
    
    Includes 10,200 shares of common stock owned by trusts the beneficiaries of which are
Mr. Rosenes children, as to which Mr. Rosene disclaims beneficial ownership.
  37




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##### Table of Contents



Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
 Affirmative Determinations Regarding Director Independence and Other Matters
     Certain Relationships and Related Person Transactions and Code of Ethics
 www.syntroleum.com
  
 Item 14.
    
    Principal Accountant Fees and Services
 Independent Registered Public Accounting Firms Fees
  2010
    
    
    2009Audit Fees
    
    $
    140,000
    
    
    $
    137,000Audit-Related Fees*
    
    
    22,500
    
    
    
    25,865Tax Fees
    
    
    15,000
    
    
    
    10,400Total
    
    $
    177,500
    
    
    $
    173,265
 
 *
    
    Represents fees for professional services rendered for review of filings in 2010 and 2009.
    38




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##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
 (a)(1) Financial Statements
 Consolidated Financial Statements for the Three Years Ended December 31, 2010:
 Report of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    F-2Consolidated Statements of Operations for each of the Three Years in the Period Ended December 31, 2010
    
    
    F-3Consolidated Statements of Stockholders Equity (Deficit) for each of the Three Year in the Period Ended December 31, 2010
    
    
    F-4Consolidated Statements of Cash Flows for each of the Three Years in the Period Ended December 31, 2010
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-6
 (a)(2) Financial Statement Schedules
  (a)(3) Index of Exhibits
 ExhibitNo.

    Description of Exhibit*3.1
    

    Certificate of Incorporation of the Company (incorporated by reference to Appendix B to the Companys
Proxy Statement filed with the Securities and Exchange Commission on May 12, 1999 (File No. 0-21911)).*3.2
    

    Amended and Restated Certificate of Designations of Series A Junior Participating Preferred Stock of
the Company dated October 24, 2004 (incorporated by reference to Exhibit 4.5 to Amendment No. 2 to the
Companys Current Report on Form 8-K dated June 17, 1999 and filed with the Securities and Exchange
Commission on October 28, 2004 (File No. 0-21911)).*3.3
    

    Bylaws of the Company (incorporated by reference to Exhibit 3.3 to the Companys Annual Report on form
10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission on March
7, 2006 (File No. 0-21911)).*3.3.1
    

    Amendment to the Bylaws of the Company (incorporated by reference to Exhibit 3.3.1 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange
Commission on March 7, 2006 (File No. 0-21911)).*3.3.2
    


Amendment to the Bylaws of the Company adopted on April 22, 2008.
(incorporated by reference to Exhibit 3.3.2 to the Companys Annual Report on form 10-K for the year ended December 31, 2009 filed with the
Securities & Exchange Commission on February 26, 2010 (File No. 001-34490)).*4.1
    

    Second Amended and Restated Rights Agreement dated as of October 28, 2004 (incorporated by reference
to Exhibit 4.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange
Commission on October 29, 2004 (File No. 0-21911)).*4.1.1
    


Amendment dated as of November 15, 2007, to Second Amended and Restated
Rights Agreement (incorporated by reference to Exhibit 4.1.1 to the Companys Annual Report on form 10-K for the
year ended December 31, 2009 filed with the Securities & Exchange Commission on February 26, 2010 (File No. 001-34490)).*4.4
    

    Warrant Agreement, dated as of June 22, 2007, between the Company and Tyson Foods, Inc. a Delaware
Corporation (incorporated by reference to Exhibit 4.4 to the Companys Quarterly Report on Form 10-Q
for the period ended June 30, 2007 filed with the Securities and Exchange Commission on May 10, 2007
(File No. 0-21911)).*4.5
    

    Registration Rights Agreement dated as of June 22, 2007, between the Company and Tyson Foods, Inc. a
Delaware Corporation (incorporated by reference to Exhibit 4.5 to the Companys Quarterly Report on
Form 10-Q for the period ended June 30, 2007 filed with the Securities and Exchange Commission on May
10, 2007 (File No. 0-21911)).*4.6
    

    Warrant Agreement with Tyson Foods, Inc dated as of June 30, 2008 (incorporated by reference to
Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the period ended June 30, 2008 filed
with the Securities and Exchange Commission on August 4, 2008 (File No. 0-21911).
  39




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##### Table of Contents



ExhibitNo.

    Description of Exhibit*4.7
    

    Warrants to Purchase 8,000,000 Shares of Common Stock Dated as of October 21, 2008 (incorporated by
reference to Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q for the period ended September
30, 2008 filed with the Securities and Exchange Commission on October 31, 2008 (File No. 0-21911).*4.8
    

    Common Stock Purchase Warrant Dated October 14, 2009 between the Company and Fletcher International,
Ltd. (incorporated by reference to Exhibit 10.89 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on October 14, 2009 (File No. 001-34490)).*4.9
    

    Common Stock Purchase Warrant Dated December 30, 2009 between the Company and Fletcher International,
Ltd. (incorporated by reference to Exhibit 10.90 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 30, 2009 (File No. 001-34490)).*4.9
    

    Common Stock Purchase Warrant Dated April 20, 2010 between the Company and Fletcher International,
Ltd. (incorporated by reference to Exhibit 10.90 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on April 20, 2010 (File No. 001-34490)).+*10.3
    

    Form of Option Agreement under the Stock Option Plan for Outside Directors of the Company
(incorporated by reference to Exhibit 10.2 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2004 filed with the Securities and Exchange Commission on March 16, 2005 (File No.
0-21911)).*10.4
    

    Master Preferred License Agreement dated March 7, 1997 between the Company and Marathon Oil Company
(incorporated by reference to Exhibit 10.23 to the Companys Registration Statement on Form S-4/A
(Registration No. 333-50253) filed with the Securities and Exchange Commission on June 8, 1998).*10.5
    

    Master Preferred License Agreement dated April 10, 1997 between the Company and Atlantic Richfield
Company (incorporated by reference to Exhibit 10.24 to the Companys Registration Statement on Form
S-4/A (Registration No. 333-50253) filed with the Securities and Exchange Commission on June 8, 1998).*10.6
    

    Volume License Agreement dated August 1, 1997 between the Company and YPF International, Ltd.
(incorporated by reference to Exhibit 10.25 to the Companys Registration Statement on Form S-4/A
(Registration No. 333-50253) filed with the Securities and Exchange Commission on June 8, 1998).*10.7
    

    Consolidation and License Agreement dated as of January 16, 2007 between the Company and Marathon Oil
Company (incorporated by reference to Exhibit 10.8 to the Companys Annual Report on Form 10-K for the
year ended December 31, 2006 filed with the Securities and Exchange Commission on March 16, 2007 (File
No. 0-21911)).+ *10.9.1
    

    SLH Corporation 1997 Stock Incentive Plan (incorporated by reference to Exhibit 10(c) to Amendment No.
1 to the Companys Annual Report on Form 10-K/A for the year ended December 31, 1997 filed with the
Securities and Exchange Commission on April 13, 1998 (File No. 0-21911)).+ *10.9.2
    

    Form of Option Agreement with certain executive officers under the SLH Corporation 1997 Stock
Incentive Plan (incorporated by reference to Exhibit 10(e) to Amendment No. 1 to the Companys Annual
Report on Form 10-K/A for the year ended December 31, 1997 filed with the Securities and Exchange
Commission on April 13, 1998 (File No. 0-21911)).+ *10.9.3
    

    Form of Option Agreement with directors under the SLH Corporation 1997 Stock Incentive Plan
(incorporated by reference to Exhibit 10(f) to Amendment No. 1 to the Companys Annual Report on Form
10-K/A for the year ended December 31, 1997 filed with the Securities and Exchange Commission on April
13, 1998 (File No. 0-21911)).+ *10.10
    

    Form of Consent to Adjustment to Option Agreements called for by Section 2.1(c) of the Agreement and
Plan of Merger dated as of March 30, 1998 by and between SLH and the Company (incorporated by
reference to Exhibit 10.8 to the Companys Registration Statement on Form S-4 (Registration No.
333-50253) filed with the Securities and Exchange Commission on April 16, 1998).
  40




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##### Table of Contents



ExhibitNo.

    Description of Exhibit*10.11
    

    License Agreement dated April 26, 2000 between the Company and Ivanhoe Energy Inc. (incorporated by
reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q for the quarter ended March
31, 2000 filed with the Securities and Exchange Commission on May 12, 2000 (File No. 0-21911)).*10.12
    

    License Agreement dated August 2, 2000 between the Company and Syntroleum Australia Licensing
Corporation (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000 filed with the Securities and Exchange Commission on August 14,
2000 (File No. 0-21911)).*10.13
    

    License Agreement dated August 3, 2000 between Syntroleum Australia Licensing Corporation and the
Commonwealth of Australia (incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report
on Form 10-Q for the quarter ended June 30, 2000 filed with the Securities and Exchange Commission on
August 14, 2000 (File No. 0-21911)).*10.14.1
    

    Amendment No. 1 to Volume License Agreement dated October 11, 2000 between the Company and Ivanhoe
Energy Inc. (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2000 filed with the Securities and Exchange Commission on November
14, 2000 (File No. 0-21911)).*10.14.2
    

    Amendment No 3 to Volume License Agreement dated July 1, 2003 between the Company and Ivanhoe Energy,
Inc. (incorporated by reference to Exhibit 10.8 to the Companys Annual Report on Form 10-K for the
year ended December 31, 2006 filed with the Securities and Exchange Commission on March 16, 2007 (File
No. 0-21911)).+*10.23
    

    Employment Agreement dated September 17, 2002 between the Company and Jeffrey M. Bigger (incorporated
by reference to Exhibit 10.7 to the Companys Quarterly Report on Form 10-Q for the period ended
September 30, 2002 filed with the Securities and Exchange Commission on November 14, 2002 (File No.
0-21911)).+*10.24
    

    Indemnification Agreement dated September 16, 2002 between the Company and Jeffrey M. Bigger
(incorporated by reference to Exhibit 10.8 to the Companys Quarterly Report on Form 10-Q for the
period ended September 30, 2002 filed with the Securities and Exchange Commission on November 14, 2002
(File No., 0-21911)).+*10.25
    

    Indemnification Agreement dated as of March 13, 2003 between the Company and Ronald E. Stinebaugh
(incorporated by reference to Exhibit 10.42 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2002 filed with the Securities and Exchange Commission on March 31, 2003 (File No.
0-21911)).+*10.16
    

    Employment Agreement dated February 17, 2003 between the Company and Ronald E. Stinebaugh
(incorporated by reference to Exhibit 10.43 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2002 filed with the Securities and Exchange Commission on March 31, 2003 (File No.
0-21911)).+*10.27
    

    Stock Option Agreement dated October 1, 2002 between the Company and John B. Holmes, Jr. (incorporated
by reference to Exhibit 10.44 to the Companys Annual Report on Form 10-K for the year ended December
31, 2002 filed with the Securities and Exchange Commission on March 31, 2003 (File No. 0-21911)).*10.33
    

    Warrant Agreement dated as of November 28, 2005 between the Company and Sovereign Oil and Gas Company
II, LLC (incorporated by reference to Exhibit 10.3 to the Companys Registration Statement on Form S-3
(Registration No. 333-138487) filed with the Securities and Exchange Commission on November 7, 2006).*10.34
    

    Warrant Agreement dated as of July 26, 2006 between the Company and Sovereign Oil and Gas Company II.
LLC (incorporated by reference to Exhibit 10.4 to the Companys Registration Statement on Form S-3
(Registration No. 333-138487) filed with the Securities and Exchange Commission on November 7, 2006).+*10.35
    

    Director Stock Option Agreement dated December 20, 2002 between the Company and James R. Seward
(incorporated by reference to Annex D to the Companys proxy statement filed with the Securities and
Exchange Commission on March 29, 2004 (File No. 0-21911)).+*10.40
    

    Employment Agreement dated as of July 6, 2004 between the Company and Edward G. Roth (incorporated by
reference to Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q for the period ended June 30,
2004 filed with the Securities and Exchange Commission on August 13, 2004 (File No. 0-21911)).
  41




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##### Table of Contents



ExhibitNo.

    Description of Exhibit+*10.41
    

    Indemnification Agreement dated as of July 6, 2004 between the Company and Edward G. Roth
(incorporated by reference to Exhibit 10.5 to the Companys Quarterly Report on Form 10-Q for the
period ended June 30, 2004 filed with the Securities and Exchange Commission on August 13, 2004 (File
No. 0-21911)).*10.48
    

    Common Stock Purchase Agreement dated November 20, 2006 by and between Syntroleum
Corporation and Azimuth Opportunity Ltd. (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed with the Securities and Exchange Commission on November 21, 2006
(File No. 0-21911)).+*10.50
    

    Syntroleum Corporation 2005 Stock Incentive Plan, effective as of April 25, 2005 (incorporated by
reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange
Commission
on April 28, 2005 (File No. 0-21911)).+*10.52
    

    Form of Performance Vested Non-Qualified Option Award Agreement (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on
July
5, 2005 (File No. 0-21911)).+*10.53
    

    Form of Stock Option Agreement (incorporated by reference to Exhibit 10.3 to the Companys Registration
Statement on Form S-8 filed with the Securities and Exchange Commission on July 8, 2005 (Registration
No.
333-126427)).+*10.54
    

    Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the
Companys Registration Statement on Form S-8 filed with the Securities and Exchange Commission on July
6,
2005 (Registration No. 333-126427)).+*10.58
    

    Form of Service Vested Incentive Stock Option Award Agreement (incorporated by reference to Exhibit
10.1 to
the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on January
27,
2006 (File No. 0-21911).*10.60
    

    Dynamic Fuels Limited Liability Company Agreement dated June 22, 2007 (incorporated by
reference to Exhibit 10.60 to the Companys Quarterly Report on Form 10-Q for the period ended June
30, 2007 filed with the Securities and Exchange Commission on August 9, 2007 (File No. 0-21911).*10.61
    

    Syntroleum Corporation Bio-Synfining Master License Agreement with Dynamic Fuels dated June 22, 2007.
(incorporated by reference to Exhibit 10.61 to the Companys Quarterly Report on Form 10-Q for the
period ended June 30, 2007 filed with the Securities and Exchange Commission on August 9, 2007 (File
No. 0-21911).*10.62
    

    Syntroleum Corporation Participation Agreement with Tyson Foods, Inc. dated June 22, 2007
(incorporated by reference to Exhibit 10.62 to the Companys Quarterly Report on Form 10-Q for the
period ended June 30, 2007 filed with the Securities and Exchange Commission on August 9, 2007 (File
No. 0-21911).*10.63
    

    Resignation and Compromise Agreement dated as of August 6, 2007 between the Company and Mr. Ziad
Ghandour and TI Capital Management (incorporated by reference to Exhibit 10.63 to the Companys
Quarterly Report on Form 10-Q for the period ended September 30, 2007 filed with the Securities and
Exchange Commission on November 8, 2007 (File No. 0-21911).*10.64
    

    Restricted Stock Agreement dated April 24, 2007 between the Company and Mr. Edward G. Roth
(incorporated by reference to Exhibit 10.64 to the Companys Quarterly Report on Form 10-Q for the
period ended September 30, 2007 filed with the Securities and Exchange Commission on November 8, 2007
(File No. 0-21911).*10.66
    

    Employment Agreement dated June 13, 2007 between the Company and Ms. Karen L. Gallagher (incorporated
by reference to Exhibit 10.66 to the Companys Quarterly Report on Form 10-Q for the period ended
September 30, 2007 filed with the Securities and Exchange Commission on November 8, 2007 (File No.
0-21911).*10.67
    

    Restricted Stock Agreement dated July 12, 2007 between the Company and Ms. Karen L. Gallagher
(incorporated by reference to Exhibit 10.67 to the Companys Quarterly Report on Form 10-Q for the
period ended September 30, 2007 filed with the Securities and Exchange Commission on November 8, 2007
(File No. 0-21911).*10.69
    

    Syntroleum Corporation Stock Purchase and Sale of Common Stock with Fletcher International Ltd. Dated
November 18, 2007 (incorporated by reference to Exhibit 10.68 to the Companys Form 8-K filed with the
Securities and Exchange Commission on November 21, 2007 (File No. 0-21911)).*10.76
    

    Employment Agreement dated April 24, 2007 between the Company and Mr. Edward G. Roth (incorporated by
reference to Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q for the period ended March
31, 2007 filed with the Securities and Exchange Commission on May 10, 2007 (File No. 0-21911).
  42




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##### Table of Contents



ExhibitNo.

    Description of Exhibit*10.80
    

    Restricted Stock Agreement dated November 16, 2007 between the Company and Ken Agee. (incorporated by
reference to Exhibit 10.80 to the Companys Annual Report on Form 10-K for the year ended December 31,
2008 filed with the Securities and Exchange Commission on March 17, 2008 (File No. 0-21911).*10.81
    

    Amendment to Syntroleum Corporation 2005 Incentive Plan (incorporated by reference to Exhibit 10.1 to
the Companys 8-K filed with the Securities and Exchange Commission on June 18, 2008 (File No.
0-21911).*10.82
    

    Stock Option Agreement Dated November 21, 2008 between the Company and Karen Gallagher (incorporated
by reference to Exhibit 10.82 to the Companys Annual Report on Form 10-K for the year ended December
31, 2008, filed with the Securities and Exchange Commission on March 2, 2009. (File No. 0-21911).*10.83
    

    Restricted Stock Agreement Dated November 21, 2008 between the Company and Edward G. Roth
(incorporated by reference to Exhibit 10.83 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2008, filed with the Securities and Exchange Commission on March 2, 2009. (File
No. 0-21911).*10.84
    

    Settlement Agreement and Release of Claims Dated October 14, 2009 between the Company and Fletcher
International, Ltd. (incorporated by reference to Exhibit 10.87 to the Companys Current Report on
Form 8-K filed with the Securities and Exchange Commission on October 14, 2009 (File No. 001-34490)).*10.85
    

    Securities Purchase Agreement Dated October 14, 2009 between the Company and Fletcher International,
Ltd. (incorporated by reference to Exhibit 10.88 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on October 14, 2009 (File No. 001-34490)).*10.86
    

    Technology Transfer Agreement dated December 15, 2008 but effective as of February 20, 2009, between
the Company and Sinopec Corp. (incorporated by reference to Exhibit 10.85 to the Companys Current
Report on Form 8-K filed with the Securities and Exchange Commission on February 25, 2009) (File No.
0-21911)****10.87
    

    CDF Equipment and Material Transfer Agreement dated December 15, 2008 but effective as of February 20,
2009, between the Company and Sinopec Corp. (incorporated by reference to Exhibit 10.86 to the
Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on February 25,
2009.) (File No. 0-21911)****10.88
    

    Amendment to Syntroleum Corporation 2005 Incentive Plan (incorporated by reference to Exhibit B to the
Companys definitive proxy statement filed with the Securities and Exchange Commission on April 13,
2009). (File No. 0-21911).*10.89
    

    Common Stock Purchase Agreement dated July 14, 2010, between the Company and Energy Opportunity, Ltd.
(incorporated by reference to Exhibit 10.87 to the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on July 14, 2010). (File No. 0-34490).*99.1
    


Dynamic Fuels, LLC Audited Financial Statements, year ended September 30, 2008.
(incorporated by reference to Exhibit 99.1 to the Companys Annual Report on Form 10-K for the year ended December 31, 2008
filed with the Securities & Exchange Commission on March 2, 2009 File No. 0-21911)).*99.2
    


Dynamic Fuels, LLC Audited Financial Statements, year ended September 30, 2009.
(incorporated by reference to Exhibit 99.2 to the Companys Annual Report on Form 10-K for the year ended December 31, 2009
filed with the Securities & Exchange Commission on
February 26, 2010 File No. 001-34490)).**99.3
    

    Dynamic Fuels, LLC Audited Financial Statements, year ended September 30, 2010.**21
    

    Subsidiaries of Syntroleum**23
    

    Consent of HoganTaylor LLP**31.1
    

    Section 302 Certification of Chief Executive Officer**31.2
    

    Section 302 Certification of Chief Financial Officer**32.1
    

    Section 906 Certification of Chief Executive Officer**32.2
    

    Section 906 Certification of Chief Financial Officer
 
 *
    
    Incorporated by reference as indicated.**
    
    Filed herewith+
    
    Compensatory plan or arrangement.***
    
    CERTAIN PORTIONS OF THIS
EXHIBIT AND THE ANNEXES THERE TO WHICH ARE INDICATED BY
XXX HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT WHICH HAS BEEN GRANTED BY THE SECURITIES AND
EXCHANGE COMMISSION. SUCH OMITTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24B-2 OF THE
SECURITIES AND EXCHANGE ACT OF 1934.
  43




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##### Table of Contents



SIGNATURES
  SYNTROLEUM CORPORATIONDated:  March 15, 2011
    By:
    /s/ Edward G. RothEdward G. RothChief Executive Officer  Name
    
    Capacity
    
    Date/s/Edward G. Roth

Edward G. Roth
    
    Chief Executive Officer
and Director (Principal
Executive Officer)
    
    March 15, 2011/s/Karen L. Gallagher

Karen L. Gallagher
    
    Senior Vice President of
Finance and Principal
Financial Officer
(Principal Financial
Officer)
    
    March 15, 2011/s/Robert B. Rosene, Jr.

Robert B. Rosene, Jr.
    
    Chairman of the Board
    
    March 15, 2011/s/Alvin R. Albe, Jr.

Alvin R. Albe, Jr.
    
    Director
    
    March 15, 2011/s/Frank M. Bumstead

Frank M. Bumstead
    
    Director
    
    March 15, 2011/s/P. Anthony Jacobs

P. Anthony Jacobs
    
    Director
    
    March 15, 2011/s/James R. Seward

James R. Seward
    
    Director
    
    March 15, 2011
  44




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##### Table of Contents



Index to Exhibits
 99.3
    
    
    Dynamic Fuels, LLC Audited Financial Statements, year ended September 30, 201021
    
    
    Subsidiaries of Syntroleum23
    
    
    Consent of HoganTaylor LLP31.1
    
    
    Section 302 Certification of Chief Executive Officer31.2
    
    
    Section 302 Certification of Chief Financial Officer32.1
    
    
    Section 906 Certification of Chief Executive Officer32.2
    
    
    Section 906 Certification of Chief Financial Officer
  45




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal ControlIntegrated Framework
  
  F-1




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##### Table of Contents



SYNTROLEUM CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  December 31,
    
    
    December 31,2010
    
    
    2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    12,513
    
    
    $
    25,012Restricted cash
    
    
    484
    
    
    
    449Accounts receivable
    
    
    556
    
    
    
    3,165Accounts receivable from Dynamic Fuels, LLC
    
    
    729
    
    
    
    150Other current assets
    
    
    361
    
    
    
    378Total current assets
    
    
    14,643
    
    
    
    29,154PROPERTY AND EQUIPMENT  at cost, net
    
    
    97
    
    
    
    156INVESTMENT IN AND LOANS TO DYNAMIC FUELS, LLC
    
    
    43,523
    
    
    
    27,900OTHER ASSETS, net
    
    
    1,133
    
    
    
    1,651$
    59,396
    
    
    $
    58,861LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    1,090
    
    
    $
    361Accrued employee costs
    
    
    119
    
    
    
    339Deposits
    
    
    484
    
    
    
    449Income tax payable
    
    
    
    
    
    
    281Current liabilities of discontinued operations
    
    
    
    
    
    
    417Total current liabilities
    
    
    1,693
    
    
    
    1,847NONCURRENT LIABILITIES OF DISCONTINUED OPERATIONS
    
    
    603
    
    
    
    603DEFERRED REVENUE
    
    
    24,300
    
    
    
    25,668COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 150,000 shares authorized, 81,683 and
76,014 shares issued and outstanding at December 31, 2010 and 2009,
respectively
    
    
    817
    
    
    
    760Additional paid-in capital
    
    
    374,397
    
    
    
    362,861Accumulated deficit
    
    
    (342,414
    )
    
    
    (332,878
    )Total stockholders equity
    
    
    32,800
    
    
    
    30,743$
    59,396
    
    
    $
    58,861
   F-2




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##### Table of Contents



SYNTROLEUM CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  For the Year Ended December 31,2010
    
    
    2009
    
    
    2008REVENUES:Technology
    
    $
    3,600
    
    
    $
    22,503
    
    
    $
    Technical services
    
    
    2,805
    
    
    
    1,940
    
    
    
    576Technical services from Dynamic Fuels, LLC
    
    
    2,005
    
    
    
    2,767
    
    
    
    2,592Other
    
    
    
    
    
    
    222
    
    
    
    1,722Total revenues
    
    
    8,410
    
    
    
    27,432
    
    
    
    4,890COSTS AND EXPENSES:Engineering
    
    
    2,871
    
    
    
    3,416
    
    
    
    3,803Depreciation and amortization
    
    
    217
    
    
    
    339
    
    
    
    620General, administrative and other (including
non-cash
equity compensation of $1,719, $4,180 and
$2,418
for the years ended December 31, 2010, 2009 and
2008, respectively.)
    
    
    7,574
    
    
    
    11,208
    
    
    
    8,848OPERATING INCOME (LOSS)
    
    
    (2,252
    )
    
    
    12,469
    
    
    
    (8,381
    )INTEREST INCOME
    
    
    31
    
    
    
    96
    
    
    
    542OTHER INCOME
    
    
    64
    
    
    
    70
    
    
    
    25LOSS IN EQUITY OF DYNAMIC FUELS, LLC
    
    
    (5,628
    )
    
    
    (4,158
    )
    
    
    (424
    )FOREIGN CURRENCY EXCHANGE
    
    
    (1,848
    )
    
    
    (3,036
    )
    
    
    2,790INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
    
    
    (9,633
    )
    
    
    5,441
    
    
    
    (5,448
    )INCOME TAXES
    
    
    
    
    
    
    (281
    )
    
    
    INCOME (LOSS) FROM CONTINUING OPERATIONS
    
    
    (9,633
    )
    
    
    5,160
    
    
    
    (5,448
    )INCOME (LOSS) FROM DISCONTINUED OPERATIONS
    
    
    97
    
    
    
    (122
    )
    
    
    1,310NET INCOME (LOSS)
    
    $
    (9,536
    )
    
    $
    5,038
    
    
    $
    (4,138
    )BASIC AND DILUTED NET INCOME (LOSS) PER SHARE:Income (loss) from continuing operations
    
    $
    (0.12
    )
    
    $
    0.07
    
    
    $
    (0.09
    )Income (loss) from discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.02Net income (loss)
    
    $
    (0.12
    )
    
    $
    0.07
    
    
    $
    (0.07
    )WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:Basic
    
    
    77,608
    
    
    
    70,355
    
    
    
    62,725Diluted
    
    
    77,608
    
    
    
    73,018
    
    
    
    62,725
   F-3




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##### Table of Contents



SYNTROLEUM CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
  Common Stock
    
    
    AdditionalNumber
    
    
    
    
    
    
    Paid-in
    
    
    Accumulated
    
    
    Stockholdersof Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Equity (Deficit)Balance, January 1, 2008
    
    
    62,253
    
    
    $
    625
    
    
    $
    339,277
    
    
    $
    (333,778
    )
    
    $
    6,124Vesting of warrants granted
    
    
    
    
    
    
    
    
    
    
    8,640
    
    
    
    
    
    
    
    8,640Vesting of awards granted
    
    
    
    
    
    
    
    
    
    
    2,275
    
    
    
    
    
    
    
    2,275Stock-based bonuses and match to 401(k)
    
    
    1,316
    
    
    
    13
    
    
    
    130
    
    
    
    
    
    
    
    143Cancellation of restricted shares
    
    
    (310
    )
    
    
    (3
    )
    
    
    3
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,138
    )
    
    
    (4,138
    )Balance, December 31, 2008
    
    
    63,529
    
    
    $
    635
    
    
    $
    350,325
    
    
    $
    (337,916
    )
    
    $
    13,044Stock options exercised
    
    
    526
    
    
    
    6
    
    
    
    342
    
    
    
    
    
    
    
    348Issuance of shares and warrants under
common stock purchase agreement
    
    
    3,406
    
    
    
    34
    
    
    
    8,966
    
    
    
    
    
    
    
    9,000Warrants exercised
    
    
    8,000
    
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    80Vesting of awards granted
    
    
    128
    
    
    
    1
    
    
    
    3,783
    
    
    
    
    
    
    
    3,784Stock-based bonuses and match to 401(k)
    
    
    425
    
    
    
    4
    
    
    
    390
    
    
    
    
    
    
    
    394Cancellation of option awards
    
    
    
    
    
    
    
    
    
    
    (945
    )
    
    
    
    
    
    
    (945
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,038
    
    
    
    5,038Balance, December 31, 2009
    
    
    76,014
    
    
    $
    760
    
    
    $
    362,861
    
    
    $
    (332,878
    )
    
    $
    30,743Stock options exercised
    
    
    351
    
    
    
    4
    
    
    
    228
    
    
    
    
    
    
    
    232Issuance of shares and warrants under
common stock purchase agreement
    
    
    5,084
    
    
    
    51
    
    
    
    9,594
    
    
    
    
    
    
    
    9,645Vesting of awards granted
    
    
    38
    
    
    
    
    
    
    
    1,230
    
    
    
    
    
    
    
    1,230Stock-based bonuses and match to 401(k)
    
    
    196
    
    
    
    2
    
    
    
    484
    
    
    
    
    
    
    
    486Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,536
    )
    
    
    (9,536
    )Balance, December 31, 2010
    
    
    81,683
    
    
    $
    817
    
    
    $
    374,397
    
    
    $
    (342,414
    )
    
    $
    32,800
   F-4




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##### Table of Contents



SYNTROLEUM CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Year Ended December 31,2010
    
    
    2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (9,536
    )
    
    $
    5,038
    
    
    $
    (4,138
    )Income (loss) from discontinued operations
    
    
    97
    
    
    
    (122
    )
    
    
    1,310Income (loss) from continuing operations
    
    
    (9,633
    )
    
    
    5,160
    
    
    
    (5,448
    )Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    217
    
    
    
    339
    
    
    
    620Abandoned patent write-off
    
    
    466
    
    
    
    
    
    
    
    Foreign currency exchange
    
    
    1,848
    
    
    
    3,036
    
    
    
    (2,790
    )Non-cash compensation expense
    
    
    1,719
    
    
    
    4,180
    
    
    
    2,418Loss on sale of assets
    
    
    
    
    
    
    84
    
    
    
    Non-cash loss in equity method investee
    
    
    5,628
    
    
    
    4,158
    
    
    
    424Changes in assets and liabilities:Accounts receivable
    
    
    2,609
    
    
    
    (2,854
    )
    
    
    (142
    )Accounts receivable from Dynamic Fuels, LLC
    
    
    (579
    )
    
    
    56
    
    
    
    45Other assets
    
    
    (79
    )
    
    
    (230
    )
    
    
    (14
    )Accounts payable
    
    
    729
    
    
    
    (301
    )
    
    
    37Accrued liabilities and other
    
    
    (501
    )
    
    
    (238
    )
    
    
    (296
    )Deferred revenue
    
    
    (3,216
    )
    
    
    (112
    )
    
    
    2,825Net cash provided by (used in) continuing operations
    
    
    (792
    )
    
    
    13,278
    
    
    
    (2,321
    )Net cash used in discontinued operations
    
    
    (320
    )
    
    
    (632
    )
    
    
    (451
    )Net cash provided by (used in) operating activities
    
    
    (1,112
    )
    
    
    12,646
    
    
    
    (2,772
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (14
    )
    
    
    (723
    )
    
    
    (202
    )Proceeds from disposal of property and equipment
    
    
    
    
    
    
    505
    
    
    
    Investment in and loans to Dynamic Fuels
    
    
    (21,250
    )
    
    
    (6,000
    )
    
    
    (14,000
    )Net cash (used in) continuing operations
    
    
    (21,264
    )
    
    
    (6,218
    )
    
    
    (14,202
    )Net cash provided by discontinued operations
    
    
    
    
    
    
    
    
    
    
    8,670Net cash used in investing activities
    
    
    (21,264
    )
    
    
    (6,218
    )
    
    
    (5,532
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from sale of common stock, warrants and option exercises
    
    
    232
    
    
    
    428
    
    
    
    Proceeds from common stock purchase agreement
    
    
    9,645
    
    
    
    9,000
    
    
    
    Repurchase of stock option awards
    
    
    
    
    
    
    (945
    )
    
    
    Net cash provided by financing activities
    
    
    9,877
    
    
    
    8,483
    
    
    
    NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (12,499
    )
    
    
    14,911
    
    
    
    (8,304
    )CASH AND CASH EQUIVALENTS, beginning of year
    
    
    25,012
    
    
    
    10,101
    
    
    
    18,405CASH AND CASH EQUIVALENTS, end of year
    
    $
    12,513
    
    
    $
    25,012
    
    
    $
    10,101NON-CASH INVESTING AND FINANCING ACTIVITIESIssuance of Common stock warrants for Dynamic Fuels Credit Enhancement
    
    $
    
    
    
    $
    8,640
    
    
    $
    SUPPLEMENTAL DISCLOSUREIncome taxes paid
    
    $
    281
    
    
    $
    
    
    
    $
    
   F-5




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##### Table of Contents



SYNTROLEUM CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 Nature of Operations
 ® ® ® ®
 ®
 Consolidation
  Revenue Recognition
      F-6




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##### Table of Contents



Cash and Cash Equivalents
  Restricted Cash
  Accounts Receivable
  Property and Equipment
  December 31,
    
    
    December 31,2010
    
    
    2009Furniture and office equipment
    
    $
    372
    
    
    $
    914Leasehold improvements
    
    
    5
    
    
    
    37377
    
    
    
    951Less  accumulated depreciation
    
    
    (280
    )
    
    
    (795
    )$
    97
    
    
    $
    156
 Income Taxes
  Asset Retirement Obligations
   F-7




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##### Table of Contents



December 31, 2010
    
    
    December 31, 2009Beginning Balance
    
    $
    1,020
    
    
    $
    1,661Liabilities Settled
    
    
    (417
    )
    
    
    (641
    )Accretion Expense
    
    
    
    
    
    
    Ending Balance
    
    $
    603
    
    
    $
    1,020
 Other Assets
  December 31,
    
    
    December 31,2010
    
    
    2009Patents
    
    $
    2,057
    
    
    $
    2,704Less  accumulated amortization
    
    
    (924
    )
    
    
    (1,053
    )$
    1,133
    
    
    $
    1,651
 Impairment of Assets
  Accounting for Guarantees
  Stock-Based Compensation
 Employee Stock-Based Compensation.
 Non-Employee Stock-Based Compensation.
 Earnings Per Share
  Year ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)Basic weighted-average shares
    
    
    77,608
    
    
    
    70,355
    
    
    
    62,725Effect of dilutive securities:Unvested restricted stock units
    
    
    
    
    
    
    44
    
    
    
    Stock options
    
    
    
    
    
    
    2,619
    
    
    
    Dilutive weighted-average shares
    
    
    77,608
    
    
    
    73,018
    
    
    
    62,725
  F-8




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##### Table of Contents



Year Ended,December
    
    
    December
    
    
    December31, 2010
    
    
    31, 2009
    
    
    31, 2008Options and warrants (in thousands)
    
    
    18,306
    
    
    
    12,600
    
    
    
    24,110Restricted stock excluded
    
    
    
    
    
    
    
    
    
    
    80Weighted-average exercise prices
of options and warrants
    
    $
    2.60
    
    
    $
    4.11
    
    
    $
    2.22Weighted average market price
    
    $
    2.02
    
    
    $
    1.96
    
    
    $
    1.17
 Defined Contribution Plan  401(k)
   Use of Estimates
  Foreign Currency Transactions
  New Accounting Pronouncements
    F-9




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##### Table of Contents



2. OPERATIONS AND LIQUIDITY
  3. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
 International Oil and Gas
   Domestic Oil and Gas
  Research and Development
   F-10




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##### Table of Contents



December 31,RESEARCH AND DEVELOPMENT
    
    2010
    
    
    2009
    
    
    2008Costs and Expenses:Research and Development
    
    
    97
    
    
    
    (122
    )
    
    
    (171
    )Depreciation, depletion amortization and impairment
    
    
    
    
    
    
    
    
    
    
    (155
    )Operating Loss
    
    $
    97
    
    
    $
    (122
    )
    
    $
    (326
    )Other Income
    
    
    
    
    
    
    
    
    
    
    17Income (Loss) before income taxes
    
    
    97
    
    
    
    (122
    )
    
    
    (309
    )Income (Loss) from Discontinued Operations
    
    $
    97
    
    
    $
    (122
    )
    
    $
    (309
    )
 4. INVESTMENT IN AND LOANS TO DYNAMIC FUELS
        F-11




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##### Table of Contents



September 30,Balance Sheet
    
    2010
    
    
    2009Total Current Assets
    
    
    10,074
    
    
    
    77,014Property, Plant and Equipment and Other Assets
    
    
    147,803
    
    
    
    77,624Total Assets
    
    $
    157,877
    
    
    $
    154,638Current Liabilities
    
    $
    10,328
    
    
    $
    15,967Long-Term Liabilities
    
    
    100,035
    
    
    
    100,016Total Liabilities
    
    
    110,363
    
    
    
    115,983Total Members Equity
    
    
    47,515
    
    
    
    38,655Total Liabilities and Members Equity
    
    $
    157,877
    
    
    $
    154,638
 Period fromJune 22, 2007,Date ofYear Ended
    
    
    Year Ended
    
    
    Inception, toSeptember 30,
    
    
    September 30,
    
    
    September 30,Statements of Operations
    
    2010
    
    
    2009
    
    
    2010Costs and Expenses
    
    $
    (12,042
    )
    
    $
    (5,260
    )
    
    $
    (19,085
    )Net Income (Loss)
    
    $
    (11,140
    )
    
    $
    (8,317
    )
    
    $
    (20,985
    )
  5. DEFERRED REVENUE
  ®
 6. COMMON STOCK PURCHASE AGREEMENTS
 Fletcher International Ltd.
    F-12




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##### Table of Contents



7. STOCKHOLDERS EQUITY
 Tyson.
   8. STOCK-BASED COMPENSATION
    F-13




---



##### Table of Contents



Stock Options
  Shares
    
    
    WeightedUnder
    
    
    Average PriceStock Options
    
    
    Per ShareOUTSTANDING AT DECEMBER 31, 2009
    
    
    9,384,311
    
    
    $
    2.94Granted at market price
    
    
    245,000
    
    
    $
    0.66Exercised
    
    
    (351,250
    )
    
    $
    0.66Expired or forfeited
    
    
    (994,475
    )
    
    $
    11.38OUTSTANDING AT DECEMBER 31, 2010
    
    
    8,283,586
    
    
    $
    2.94
  Options Outstanding
    
    
    Options ExercisableWeightedWeighted
    
    
    Weighted Average
    
    
    
    
    
    
    AverageRange of
    
    Options
    
    
    Average
    
    
    Remaining
    
    
    Options
    
    
    Exercise PriceExercise Price
    
    Outstanding
    
    
    Exercise Price
    
    
    Contractual Life
    
    
    Exercisable
    
    
    Per Share$0.66    $0.66
    
    
    5,010,631
    
    
    $
    0.66
    
    
    
    7.53
    
    
    
    1,352,681
    
    
    $
    0.66$1.49    $1.55
    
    
    1,010,666
    
    
    
    1.55
    
    
    
    1.75
    
    
    
    1,010,666
    
    
    
    1.55$1.62    $2.89
    
    
    1,140,195
    
    
    
    2.33
    
    
    
    3.71
    
    
    
    1,140,195
    
    
    
    2.33$3.19    $6.88
    
    
    769,277
    
    
    
    6.32
    
    
    
    3.50
    
    
    
    769,277
    
    
    
    6.32$7.10    $10.14
    
    
    240,904
    
    
    
    9.28
    
    
    
    4.63
    
    
    
    240,904
    
    
    
    9.28$10.51    $18.88
    
    
    111,913
    
    
    
    13.80
    
    
    
    1.12
    
    
    
    111,913
    
    
    
    13.808,283,586
    
    
    $
    1.95
    
    
    
    
    
    
    
    4,625,636
    
    
    $
    2.97
    Year EndedDecember 31, 2008Expected dividend yield
    
    
    0
    %Expected volatility
    
    
    90
    %Risk-free interest rate
    
    
    2.02
    %Expected life
    
    5.50 yrs.
    F-14




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##### Table of Contents



Restricted Stock
  Weighted-AverageGrant Date FairShares / Units
    
    
    ValueNONVESTED AT DECEMBER, 31, 2009
    
    
    1,466,500
    
    
    $
    1.12Granted
    
    
    146,023
    
    
    $
    2.59Vested or Exercised
    
    
    (557,311
    )
    
    $
    2.84Expired or forfeited
    
    
    
    
    
    $
    NONVESTED AT DECEMBER 31, 2010
    
    
    1,055,212
    
    
    $
    0.41
 9. INCOME TAXES
  Year
    
    Amount(in thousands)2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    311,449
    F-15




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##### Table of Contents



December 31,2010
    
    
    2009Deferred tax assets:NOL carry-forwards
    
    $
    118,320
    
    
    $
    117,765Research and development credit
    
    
    8,085
    
    
    
    8,207Deferred revenue
    
    
    7,227
    
    
    
    7,259Investments
    
    
    4,111
    
    
    
    1,951Stock-based compensation
    
    
    3,118
    
    
    
    3,023Other
    
    
    2,264
    
    
    
    1,705143,125
    
    
    
    139,910Deferred tax liabilities:Other
    
    
    (431
    )
    
    
    (627
    )Net deferred tax asset before valuation allowance
    
    
    142,694
    
    
    
    139,283Valuation allowance
    
    
    (142,694
    )
    
    
    (139,283
    )Net deferred tax assets
    
    $
    
    
    
    $
    
  10. COMMITMENTS AND CONTINGENCIES
  Year
    
    Amount(in thousands)2011
    
    $
    1812012
    
    
    982013
    
    
    1012014
    
    
    322015
    
    
    9Thereafter
    
    
    57$
    478
     F-16




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##### Table of Contents



11. SIGNIFICANT CUSTOMERS
  12. FAIR VALUE DISCLOSURES
  13. SEGMENT INFORMATION
  14. QUARTERLY DATA

(UNAUDITED)
 Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,(in thousands, except per share data)2010Revenues
    
    $
    4,238
    
    
    $
    1,290
    
    
    $
    1,262
    
    
    $
    1,620Operating income (loss)
    
    
    1,527
    
    
    
    (1,066
    )
    
    
    (1,193
    )
    
    
    (1,520
    )Net income (loss) from
continuing operations
    
    
    425
    
    
    
    (1,207
    )
    
    
    (3,859
    )
    
    
    (4,992
    )Net income (loss) from
discontinued business
    
    
    (22
    )
    
    
    182
    
    
    
    (24
    )
    
    
    (39
    )Net income (loss)
    
    
    403
    
    
    
    (1,025
    )
    
    
    (3,883
    )
    
    
    (5,031
    )Basic and diluted EPS:Continuing operations
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    (0.05
    )
    
    $
    (0.06
    )Discontinued operations
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00Net income (loss)
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    (0.05
    )
    
    $
    (0.06
    )
 Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,(in thousands, except per share data)2009Revenues
    
    $
    20,190
    
    
    $
    1,694
    
    
    $
    4,411
    
    
    $
    1,137Operating income (loss)
    
    
    13,346
    
    
    
    (1,093
    )
    
    
    1,553
    
    
    
    (1,337
    )Net income (loss) from
continuing operations
    
    
    11,222
    
    
    
    (3,779
    )
    
    
    (242
    )
    
    
    (2,041
    )Net income (loss) from
discontinued operations
    
    
    (39
    )
    
    
    (31
    )
    
    
    (28
    )
    
    
    (24
    )Net income (loss)
    
    
    11,183
    
    
    
    (3,810
    )
    
    
    (270
    )
    
    
    (2,065
    )Basic and diluted EPSContinuing operations
    
    $
    0.18
    
    
    $
    (0.05
    )
    
    $
    0.00
    
    
    $
    (0.02
    )Discontinued operations
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00Net income (loss)
    
    $
    0.18
    
    
    $
    (0.05
    )
    
    $
    0.00
    
    
    $
    (0.02
    )
   F-17